| October 25, 2008 |
| PBS Coals Limited Announces Agreement With Severstal for Take Up and Pay of C$8.30 Offer; Principal Shareholders Agree to Price Reduction to Complete Sale |
TORONTO, ONTARIO--(Marketwire - Oct. 25, 2008) - PBS Coals Limited (TSX:PBS) announced today that the Company's principal shareholders and the Company have reached an agreement (the "Supplemental Agreement") with Mining Holding Company LLC, a holding company in OAO Severstal's Resource Division ("Severstal") and 7027940 Canada Limited (the "Offeror"), a subsidiary of Severstal Resources, pursuant to which the Offeror has agreed to take up and pay for all common shares tendered into its September 5, 2008 offer (the "Offer") at a price of C$8.30 per share and waive all conditions to the Offer. The expiry time of the Offer was 11:59 pm (Eastern) on October 24, 2008. 95% of the outstanding shares of the Company were tendered into the Offer at the expiry time. Severstal has also confirmed its agreement to acquire indirectly the shares of management in Mincorp Acquisition Corp., an 87% subsidiary of the Company.
The Offeror has agreed to take-up and pay for the shares tendered into the Offer on November 3, 2008, subject to an extension to pay to November 5, 2008 with regulatory approval.
In order to resolve outstanding matters between the Company and Severstal, the Company's principal shareholders and Mincorp Acquisition Corp.'s management shareholders have agreed to an aggregate reduction of the proceeds payable to them of US$300 million (C$382 million). In entering into the Supplemental Agreement, the Company's principal shareholders and management shareholders have obtained a commitment from the Offeror and Severstal to complete the Offer and the purchase of the shares of Mincorp Acquisition Corp.
The Offer price of C$8.30 per share offered to shareholders other than the principal shareholders remains unchanged.
The principal shareholders represent approximately 80% of the shares outstanding and include institutional and individual shareholders, each member of the board of directors of the Company and each member of management who is a shareholder of Mincorp Acquisition.
The board of directors wishes to thank its principal shareholders and management shareholders for the concessions made in response to challenging circumstances.
Colin K. Benner, the Chairman of the Board of the Company remarked that "although the final terms represent a price reduction for the principal shareholders, management and directors, it was concluded that it was in the best interest of all the shareholders. This is a unique transaction and we would like to thank our major shareholders; Sprott Resources, the Lundin family, the Talbot Group, Cormark and others to have reached this point as they took a major position on seeing that the transaction is considerate of the most recent and smaller investors. As well, management is completely supportive of the approach and we must not forget that Severstal persevered to reach a positive outcome. We would like to take this opportunity to thank all of the PBS shareholders for their support and patience and all those who were involved in the process."
Robert Scott, the President and Chief Executive Officer of the Company also noted that "the completion of the Offer will allow the Company to pursue its operational objectives and to continue as a leader in the Pennsylvania coal mining community. I wish to thank our shareholders and employees for their continued support. I also am grateful for the board of directors' guidance throughout the Company's expansion phase in the last year, which has led us to a listing on the TSX and sale to Severstal".
About PBS Coals Limited
PBS Coals Limited owns 87% of the equity of the PBS Coals Group of Companies, a privately held group of companies engaged in the mining, processing and sale of primarily metallurgical coal from their properties in West-Central Pennsylvania (the "PBS Group"). The PBS Group consists of PBS Coals, Inc., a Delaware corporation, and Rox Coal, Inc., a Pennsylvania corporation, and their subsidiaries and holding companies. The PBS Group currently produces approximately 3 million clean tons of bituminous coal a year from both its underground and surface operations. The PBS Group has six surface and six underground mines in operation, and controls 153.3 million tons of measured and indicated coal resources with an additional 98.3 million tons of contingent resources.
The technical information in this press release has been reviewed by Tim Phillips, the Executive Vice-President of PBS Coals Limited and a director of PBS Coals Limited. Mr. Phillips is a qualified person for the purposes of National Instrument 43-101 - Standards of Disclosure for Mineral Projects. Mr. Phillips has verified the data in this press release by referring to the Independent Technical Report - Coal Reserves and Mining Operations - PBS Coals, Inc. prepared for PBS Coals Corporation by John T. Boyd Company effective May 30, 2008 available at www.sedar.com. Details of quantity and grade or quality of each category of mineral resources is included in the report.
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